The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.

The New York Fed engages with individuals, households and businesses in the Second District and maintains an active dialogue in the region. The Bank gathers and shares regional economic intelligence to inform our community and policy makers, and promotes sound financial and economic decisions through community development and education programs.

Board Announces Final Amendments to Regulation E on Disclosure Obligations of ATM Operators

January 3, 2006

Circular No. 11758

To All Depository Institutions and Others Concerned
in the Second Federal Reserve District:

The Federal Reserve Board has announced final amendments to Regulation E (Electronic Fund Transfer Act) that clarify the responsibilities of parties involved in electronic check conversion transactions and require that consumers receive written notification in advance of these transactions.

In a separate action, the Board also amended Regulation E so that it covers payroll card accounts.

Among other things, the final rule provides that merchants and other payees that convert payments by check into electronic fund transfers must provide a notice to consumers to obtain consumer authorization for the electronic fund transfer.

The final rule addressing electronic check conversion and other matters will take effect 30 days after the date of publication in the Federal Register, which is expected soon. The mandatory compliance date is January 1, 2007.

In addition to the final rule on electronic check conversion services, the Board is adopting a separate interim final rule on payroll card accounts to provide that payroll card accounts established for the purpose of providing salary, wages, or other employee compensation on a recurring basis are accounts covered by Regulation E.

The amendments to address payroll cards are being issued as interim final rules so that interested parties may comment on the new requirements. The Board requests comment within 60 days after publication in the Federal Register.